As the new year begins, many people will be pressing ahead with their plans to buy, sell or remortgage a property.
But for a huge number of people in the UK, the wider economic climate will be unlike anything they’ve dealt with before.
In an environment where inflation remains above the Bank of England’s target of two per cent, mortgage interest rates are higher than many will have previously experienced, people need professional advice more than ever, so they can make informed, appropriate decisions that work for them.
And that’s where you come in.
So what key messages should you be sharing with your clients over the next 12 months?
Review your financial plans
The environment in which clients are buying, selling and remortgaging bears little resemblance to what it looked like a few years ago. So it’s vital that you encourage them to think about how their transaction fits into their overall financial situation.
Will they still be on track to achieve their wider long-term goals, such as retiring at their chosen age or being able to afford school fees for their children, if they press ahead?
As market dynamics shift, it’s important that clients reevaluate their strategies, expectations and timelines accordingly, so they don’t find themselves knocked off course.
What’s going to happen with interest rates this year?
Market forecasters are currently split on whether or not there will be a recession in the UK in 2024.
Either way, low growth is expected this year and interest rate expectations remain volatile. Inflation is trending in the right direction, but still remains above the 2% target.
The positive news for mortgage customers is that the Base Rate is expected to fall this year. The timing of the first interest rate cut is hotly debated, with a range of forecasts between March 2024 and February 2025, but most forecasters currently expect between May and August 2024.
Significant global events including ongoing geopolitic tensions, elections in the UK and the US and domestic political uncertainty mean there is plenty of scope for interest rate volatility to continue throughout 2024.
What’s going to happen to house prices in 2024?
House prices were more resilient than most were expecting in 2023. Looking forwards into 2024, lower interest rate expectations reduce the probability of a significant fall in house prices, although there is plenty of uncertainty on the horizon.
Key events to look out for are the Chancellor’s Budget on March 6th, followed by the Labour and Conservative manifestos in the run-up to the general election, which is set to take place this year.
How professional advice can help you make the best mortgage decisions
Ultimately, you need to convince members of the public who are buying, selling or remortgaging a property of the added value that professional advice can bring.
You can do that by showing how you can help people find different mortgage products that suit their specific circumstances, and get to grips with complex terminology, so they can make informed decisions and understand its implications.
Fixed or variable - what is best in the current climate?
Variable-rate mortgages are susceptible to fluctuations in interest rates, and can therefore be unpredictable. That in turn means mortgage holders could face higher monthly repayments if interest rates go up.
Discussing and encouraging clients to consider their risk tolerance and financial resilience before opting for a variable-rate mortgage, or alternatively go for a fixed-rate mortgage that could provide greater stability is a great way to show the value of advice.
Why you should clearly define your financial goals
Taking out a mortgage is one of many financial commitments, so it’s important to remind clients not to overlook their other obligations, responsibilities and objectives.
You can help by advising clients to set clear and specific goals, so they understand and consider how their mortgage fits into the bigger picture and don’t get knocked off course from achieving the lifestyle and outcomes they want.
Why you shouldn’t overlook protection
By encouraging clients to think about the bigger picture, you can also give them added value by pointing them towards other financial products, beyond mortgages.
Protection products such as home insurance, life insurance and health insurance, for instance, could be extremely useful and save clients huge amounts of money further down the line.
The newspapers are full of gloomy headlines concerning the wider economy and the housing market in particular - and that can have a big impact on members of the public.
First-time buyers, for instance, might feel that their dream of owning a property and being able to afford it is beyond their reach. But in many cases, that isn’t actually true, so you could be ideally placed to debunk any myths and point people towards financial products that can help them achieve their goals.
In this volatile environment, the key to successfully engaging with prospective clients in 2024 is staying up to date with market developments, changes in government policy and the challenges that people are currently facing.
While shifting sands can create problems, they can also open up opportunities. Even in the toughest economic climate, expert advice is vitally important.
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Accord Mortgages Limited is authorised and regulated by the Financial Conduct Authority. Accord Mortgages Limited is entered in the Financial Services Register under registration number 305936. Buy to Let mortgages for business purposes are not regulated by the Financial Conduct Authority. Accord Mortgages Limited is registered in England No: 2139881. Registered Office: Yorkshire House, Yorkshire Drive, Bradford BD5 8LJ. Accord Mortgages is a registered Trade Mark of Accord Mortgages Limited.
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